The cell phone market, in the US at least, is very different than the PC market. Since phone carriers subsidize the manufacturers, we've actually seen margins remain relatively high.
We certainly haven't seen a race to the bottom. To be clearer, the subsidy model changes the equation. The reason for getting you on a new phone is to get you to reup a $2000 contract. If you have a phone that drives this (iPhone) then the cost of the phone is worth it to the carriers. If the phone doesn't do that (Kin) then it doesn't matter if the phone is free.
Until the US market sells unlocked phones directly to consumers (as the dominant way to distribute phones to consumers) there will not be a race to the bottom.
UPDATE: And one other thing. Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks). So we also have the added factor of very limited shelfspace. Whereas in the PC market, there are tons of PC makers and DIY.
Realistically, the carriers probably won't have more than 10-15 smartphones available at any one time to purchase (testing costs money), and have good relationship with a handful of phone manufacturers -- all of which work to avoid a race to the bottom.
> "Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks"
I believe that's a temporary situation with a clear end in sight. LTE is rolling out with a unified SIM standard, right? 4G should finally bring the US a market where you can consider phone and carrier separately.
>Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks).
Not true of the GSM carriers, at least. I have a Nokia N86 which I bought unlocked from Amazon; it works fine on AT&T's 3G. And the Nokia N900 was sold only unlocked, and works on T-Mobile's 3G.
That's good to hear. I'd figure that TMo would be early on this. Surprised to hear about ATT. I know in the past I've tried and was stuck with EDGE. Almost certainly not the case with CDMA.
We certainly haven't seen a race to the bottom. To be clearer, the subsidy model changes the equation. The reason for getting you on a new phone is to get you to reup a $2000 contract. If you have a phone that drives this (iPhone) then the cost of the phone is worth it to the carriers. If the phone doesn't do that (Kin) then it doesn't matter if the phone is free.
Until the US market sells unlocked phones directly to consumers (as the dominant way to distribute phones to consumers) there will not be a race to the bottom.
UPDATE: And one other thing. Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks). So we also have the added factor of very limited shelfspace. Whereas in the PC market, there are tons of PC makers and DIY.
Realistically, the carriers probably won't have more than 10-15 smartphones available at any one time to purchase (testing costs money), and have good relationship with a handful of phone manufacturers -- all of which work to avoid a race to the bottom.